With reference to Indian economy which of the following are responsible for the Current Account Defi...........

Economic Affairs Balance of Payments

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With reference to Indian economy, which of the following are responsible for the Current Account Deficit?

1) Deprecation

2) High exchange rate

3) Change in Exports and Imports

4) Fall in incomes abroad

Select the correct code

1, 2 and 3

2, 3 and 4

1, 3 and 4

1, 2, 3 and 4

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Explanation:

A high exchange rate can also cause a current account deficit as it will raise export prices and lower import prices.
A depreciation of the rupee increases the price of the country’s imports, and also makes its exports cheaper for foreigners. Hence will reduce CAD.

By: Vishal

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Aditya partap

Incorrect solution Please check (D is appropriate answer)

Tanya

Depreciation will improve the condition of CAD as it will increase exports and reduce imports by making them costlier. Therefore, answer is 2, 3 and 4.

Sushank Saini

explanation is given correct but answer key is incorrect

abhimanu admin

Kindly read the Explanation carefully it says Depreciation will reduce CAD.

Siddharth Jena

Depreciation will reduce CAD, it will make imports costlier, exports will book, value of exports will be more than imports... especially for India...take example of 2002 depreciation event....

abhimanu admin

Rectified.